The German federal cabinet approved a decree by the Ministry of Labour and Social Affairs on Tuesday that will see pensions in Germany rise noticeably.
The cabinet approval of the annual pension adjustment, which is based on wage developments, will increase pensions in western Germany by 3.18 percent as of July 1, and by as much as 3.91 percent in eastern Germany.
German Labour and Social Affairs Minister Hubertus Heil commented that the rise was an “extraordinarily positive development in pensions”.
The pension level in Germany which is the ratio of pensions and average wages rose slightly to 48.16 percent. In Germany, pension increases follow an automatic process which has been mainly driven by the healthy labor market and positive wage development.
Local media reported that the annual increase will cost almost 11 billion euros (12.2 billion U.S. dollars).
Since the reunification of Germany in 1990, pensions in eastern Germany are approaching the level of western old age benefits. Pensions across Germany are to gradually reach the same level by 2024.
“Once again it is clear that the pension insurance system is on a very solid footing”, commented Peter Weiss, social policy spokesman for the parliamentary group in the German Bundestag of the conservative union (CDU/CSU).